Netfonds reported strong FY23 prelims beating our expectations. Further, the company provided a new guidance for FY24 that remained rather vague for the moment. In detail:

Gross sales came in at € 197m (+12% yoy), clearly above our estimate of € 191m. Key driver were the business areas Wholesale and Regulatory & Technology business both showing yoy growth rates north of 10% mainly fuelled by AuA that grew by 11% to € 23.8bn (vs eNuW: € 23.2bn). Thanks to scale effects, material expenses should have declined relatively to sales to 80.4% (vs 80.9% in FY22) resulting in net sales of € 37.0m (3% yoy vs eNuW: € 36.1m).

EBITDA stood at € 6.2m (-28% yoy, 85% qoq), also above estimates of € 5.7m, mainly the result of the sound topline development compensating for higher than anticipated OPEX of € 30.8m (4% yoy vs eNuW: € 30.4m). EBT came in at € 2.2m (9% yoy vs eNuW: € 1.7m) as a result of € 4.1m D&A and a financial result of € 0.1m.

Overall, Q4 figures marked a strong finish of a sound FY23. On the back of € 23.8 bn AuC in FY23 as a starting point into FY24, paired with stock markets at all-time highs after two months, topline should continue to grow in FY24, even without new AuA inflows that we consider as very likely (eNuW: 8% to € 25.6bn). Even better, profitable AuM from the wealth management should grow even more dynamically (eNuW: 25% to € 4bn).

Further, the finfire platform is seen to fuel consolidation of the insurance broker market that is in contrary to the investment adviser market, still highly fragmented. Thanks to finfire, the selling and managing of insurance products is much easier unlocking huge cross-selling potentials, as the already onboarded investment adviser can additionally offer a wide range of insurance products to its customers. Netfonds proprietary, 360° finfire platform hence remains the key mid- to long term growth and scalability driver.

In order to reflect the strong FY23 figures, the bright market environment and the enormous (cross-selling) potential arising from finfire, we now expect for FY24 € 45m net sales and an € 12.5m EBITDA, in line with management guidance of net sales “well above € 40m” and “strong increase in EBITDA”.

BUY with a new PT of € 73.00 (old: € 71.00), based on DCF.